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The 1-year UK inflation rate is 4% and the 1-year US inflation rate is 3%. The current spot exchange rate is $1.90/pound. a. Assuming Purchasing
The 1-year UK inflation rate is 4% and the 1-year US inflation rate is 3%. The current spot exchange rate is $1.90/pound.
a. Assuming Purchasing Power Parity holds, what is your estimate of the spot rate that is likely to prevail in one year?
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